DHCR Uses Default Formula to Set Legal Rent for Unregistered SRO Unit

Tenant filed an application with the DHCR in 2015, asking for a ruling on his SRO unit's regulatory status and legal regulated rent (LRR). In 2019, the DRA found that the unit was rent stabilized and that the base date rent was $970.87 per month in December 2011. Tenant appealed and won, in part. The DRA had set the rent by applying default method #1 to establish the LRR. That method called for using the lowest rent registered for a comparable unit in the building in effect on the date the complaining tenant first occupied the apartment. Tenant claimed that this was an error. RSC Section 2522.6(b)(2) states that, when a base date rent can't be determined, the legal rent must be determined at the lowest amount resulting from one of four alternatives under the so-called "default formula." The DHCR agreed that default method #2 should have been applied, using the complaining tenant's initial rent reduced by the percentage adjustment authorized by RSC Section.2522.8. This was because the building and its apartments were not and have not been registered. So, the base date rent is $606.25, equal to tenant's paid rent of $625 minus the RGB Hotel guideline #41 increase of 3 percent. Tenant's rent was frozen at the reduced amount until the apartment was registered with the DHCR. 

Holmes: DHCR Admin. Rev. Docket No. HQ410020RT (2/23/23)[4-pg. document]